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Estonia’s President Wants To Lead The OECD’s Digital Revolution, Forbes


Kersti Kaljulaid, the current President of Estonia, is running to become the Organization for Economic Cooperation and Development's (OECD) next Secretary-General. As digital governance is in her blood, she could be key in leading the OECD's digital revolution in the post-Covid world.

She is one of three women running for the role, along with Cecilia Malmstrom of Sweden and Anna Diamantopoulou of Greece. One of them could become the first one to ever lead the EOCD since its creation, in 1961. There are a total of 10 people running. Kaljulaid was also the first woman to ever be elected as President of Estonia. "I'm a very technocratic person. So no, for me, this [being the first woman President] is irrelevant," she said, "This is relevant to my people here in this country, because now little girls, when they go to kindergarten, and they draw their president, they draw a woman in a skirt."

Estonia is one of the world's most advanced digital governments, and as such, Kaljulaid would like to advance the OECD's perception of digital policy, whether it has to do with taxation, digital ID, or remote work.

"For four years now, I've traveled the world and talked about how technologies are changing our societies, how we must understand that not only goods, markets, but services markets are going to be global, that we must be sure that when we go protecting our data that we do not at the same time levy taxes to this data," Kaljulaid said, about her decision to run "when we discuss these issues with people, the answer is always 'but this is an OECD-level question.'"

The OECD is an international economic organisation composed of 37 countries founded in 1961 to promote democracy and the market economy. Member countries are mainly located in Europe and North America, but Australia, Chile, Colombia, Mexico, New Zealand, Israel, Japan and South Korea are also members.

Born in Tartu in 1969, Kaljulaid witnessed firsthand Estonia's transition from a Soviet to an independent country, and was involved in various steps of the process. "I grew up in a family where there are no communist and my grandmother served nine years in Stalin's Gulag for Anti-Soviet activity, so my grandmother was back from Siberia, my mother had never exited the Soviet Union and I knew myself I will never get outside of the Union," she explained, "So I wanted to be a natural scientist and I studied genetic engineering, because this was so far from social sciences and politics and the Soviet Union." After Estonia gained its independence in 1991, Kaljulaid started her career in the private sector, and then worked her way up in Estonia's government, including working as an advisor for the Prime Minister Mart Laar in 1999, when she was only 29.

Kaljulaid talked to me on Tuesday, November 3rd. This is part of a series of interviews with female contenders for the Secretary-General role at the OECD. Others will follow with Cecilia Malmstrom of Sweden and Anna Diamantapoulou of Greece.

Stephanie Fillion: How would you approach the role, when it comes to the state of the world right now with the pandemic and bringing the OECD where it should be?

Kersti Kaljulaid: My priority will be serving the member states because I think we will need to look past megatrends and deal with them, but the OECD's Secretary-General serves the member states, and this is what I will do. We can only move as quickly a member states; this is very common in multilateralism, just like in the European Union, you can only move as quickly as your members want you to. The OECD needs not only a general trend-based strategy, which would mean that it always is analyzing the phenomena, which really have a macro influence on our future. This is important for the OECD, but then the particularities will be that you have to work with every ambassador to OECD to see how it can serve that particular country, what are the nuances because they are very, very different.

For example, look at the countries in Europe, they remain worried about how to cut back their public sector, but still serve the people, and here comes into play this thinking. But if we could somehow make sure that, let's say, the public sector is taken out of the equation of paying salaries for support for lower-paid people, then we can adjust our fiscal balances and serve our people more efficiently without raising taxes even after the crisis. But if you, for example, look at the Chilean issues, then they have a totally different macro environment. They have a country where for now, about one year and even more people are demanding that the country should be more like a social market economy, more services, better education for everybody in every social class, more distribution of services. But the tax burden on the country is about 20%, you cannot do a social market economy with such a tax burden. So you need to support that country differently than the other countries. Then you have the Asian countries, looking for different discussions and solutions.

Then, altogether on the trade issues and the tax, which the OECD needs to advise the member states in order to allow them to come to the conclusions how they can best tax the global economy, more and more interlinked, and then serve around it. You cannot say that the Secretary-General has it’s own one and only vision, and we go ahead with this vision. Of course, It's necessary to have a vision and to understand the macro trends, but I believe that most candidates understand the macrotrends quite similarly. And then comes into the play the aspect of serving member states.

Fillion: What is your vision of the changes that should be done with taxation?

Kaljulaid: Nowadays, geography is not so important in where we live and where we work, every year 10,000s of people are starting to work for many companies at the same time, offering narrowly specialized services online for different companies, which may be in different countries with different jurisdictions. But our tax and serve models still insist that you have a job address, everybody goes to one office and the stable river of taxes flows into the state's coffers. Then you have a home address and according to this home address, government delivers you services like education for children, health care, and so on. Today we see more and more people go and work independently, and if we do not know how to adjust this model so that it uses this more powerful person working more globally, then these people simply leave our system. The richer ones go private, and the rest become internet precariat, they will not be able to support the service level which we are currently used to. This is already going on.

This is what I think we should take notice and not only discuss how we tax the big internet companies – this is only a first step we should quickly agree on a conclusion there, but see the wider picture: How on earth are we going to serve our citizens when they either sit in my country but work elsewhere, or work everywhere and at the same time also move around? How do I offer healthcare to Estonian citizens living in Spain? This is the question and I believe we need to first look at this phenomenon into the face and look at statistics, understanding how many people can work in a geographically neutral way done offshore, we now know thanks to teh Coronavirus that it's for a higher proportion of people who can, I believe it's 30% or more in every country. This is a growing phenomenon we need to react to. That's what I would like to discuss as far as taxes are concerned. It's also the issue of trade, obviously, because it's the trade and services industry.

Fillion: One major value of the OECD is democracy. We've seen in recent years that democracies around the world have been challenged by disinformation on the internet. Do you think Estonia's system of Digital ID could be a solution to this problem? And what are the limits to it?

Kaljulaid: I really protest that technology challenges democracy, the Internet cannot challenge democracy, it's the people using the tools available over the Internet who may challenge democracy. They might have been doing so before the era of the internet, but now they have easier ways of influencing that kind of chaos in societies in bending our society one or another way, but it is definitely not the fault of technology. Where you are right is that anonymity can only be driven away from the internet by digital IDs.

Sometimes, I'm so sad if people say that Internet companies have created an unsafe environment, but think that our companies cannot create digital IDs, passports can be only given out by governments and governments are the only ones who can legally protect them. This is the idea behind the digital ID. It's a passport, on the Internet, because our citizens anyway, transact online. So we, governments, have to create legal space in order to also protect these digital IDs, not only by technology but also by the law. And then we'll have to make sure that our digital IDs are interlinked. In Europe, we now have an understanding that we should all be able to interchange our digital IDs, for example. That's why I think Europe actually is ahead if you compare with other developed regions. The decision of the current [European] Council presidency to make sure that every European citizen has a digital ID is one example. This is something which I believe is extremely important in making sure that our democracies can survive also the internet.

Of course, this is not the only thing that will help our democracies to survive. Also, understanding the economic change, which is no less than the one from the agrarian to the industrial period. Understanding this phenomenon, reacting adequately, also means that democracies will be sustained because democracy is not sustained unless it serves our citizens. How they see their lives, accept how they live, and then serve them around this lifestyle: this is something where I feel we are behind the curve.

Democracy also is very important, and I believe the OECD should remain a club of democratic countries. I'm all for enlargement, but if you think of the lower-middle-income countries, then you could argue that you could have a period of economic growth, whether you are a democracy or whether you are not a democracy. As soon as you start looking at the high-income countries, and exiting the middle-income rate ranks, you see that you need a lot of creativity. So, I have a perfectly valid economic reason, also to say that OECD should remain a problem democratic nations, because only free people can be creative enough to sustain long-term economic growth. Creative people only live in free countries in free democracies, because creativity lives only where people are free. I feel deeply about this because I know how it felt in the Soviet Union where nobody took any economic initiative because they knew it will only be punished. So the OECD has an economic reason to remain in the club of democratic nations because in the long term, sustainable economic growth of relatively high levels, which is necessary to be an OECD member, can only be sustained if you are a democracy.

Fillion: Can you tell me more about your vision of the future of Digital IDs and how would you deal with governments that are more afraid of government's digitalization, like the United States?

Kaljulaid: We do not distinguish between the private and the public sector here in this country. The digital ID is a passport, and you use your passport if you go through a private airport, or a public airport, for example, as simple as that. It's ridiculous to have separate ecosystems for private and public. In addition, public IDs will never be used, unless they are also used, let's say, for logging in into our internet bank or elsewhere. The reason is that citizens normally don't communicate with the government often enough that it will be common for them and a natural thing to use that digital ID if they only rely on public services. Public services only gradually come online; In Estonia, we now have thousands, but initially, we only had an electronic tax system. If you only had electronic tax, then you would probably not have to remember how you use your digital ID. If you use the same ID to log in to your bank, then, of course, you will know how to use it. This is a win-win situation for the private and public sector: everybody gets a safe identity, which is also guaranteed by the law, banks and private companies don't have to spend resources in holding up an identification model. Instead, they can offer services on the same platform, as the government, and as a result, people will have one safe and secure digital ID, which they always know how to use.

When it comes to trust, first and foremost, we need to say that in Estonia, this trust did not just happen. It is in the legal space that built this trust as well. The government has clearly said 'I'll give you a digital ID so that you can transact among yourself, private companies, people to people, people to government. I promise you, and this is in legal texts, I'm not using your data.' I own my own data, even if it is stored in a government server somewhere, I own my data. I am the only person who can legally gather all data from all government dispersed data systems into one place, nobody else can, except for parents of children up to the age of 18 cannot.

Every doctor and every nurse who has looked at my file only could access it if they logged in into the system personally, showed their passport, their digital ID to the system said 'I am Dr. Smith, I came to check on the data of Kersti Kaljulaid, and the fingerprints will be on the file.' So digital is just safer for citizens on paper, and you can explain this to people. The explanation is in the legal text, people know that data is better protected in digital because it says so in the law, and the state has demonstrated that if somebody breaks the law, they will be prosecuted. We have had processes where people because their work had access to other people's data, but they have no reason to access that data, were taken to court. Punishments can be pretty harsh here in this country, you can lose your job, it will be a public choice that you checked your last girlfriend's or boyfriend's salary data, for example. If you have their tax code, you can have access to that. But you shouldn't, you will be taken to the court.

Fillion: One thing that you wrote in your letter is that most people are not ready to work from nine to five anymore and want to take a month of holiday. When you talk about sort of this new structure of work, what do you think it is the best way to approach this new reality? What is the role of the OECD in that?

Kaljulaid: First and foremost, it's an error to think that only this part of society who can offer modern services works differently. For example, handicrafts people. Two centuries ago, they could only sell as much as the markets nearby where they could travel port. 200 years ago they signed agreements, we saw many shops open up and a huge rise in productivity. Now, they sell online. We have in Estonia a man who comes from South Africa, he's not even Estonian. He lives in a little village, his closest clients about a thousand kilometers away, he makes world-class bowls and barrels. He's a handy craftsman. I know Estonian handicraft people gathering the societies that sell globally.

Even handicapped people; take an example let's say there is a boy who likes to make red socks. He's an autistic guy, for some reason, they love routines and so on but they don't like people very much. So he sits and makes red socks. 20 years ago, this person would have been unemployed, with his peculiar hobby and no capacity to communicate. But nowadays, among the 7 billion people online, you will find enough buyers for your red socks, and you don't even have to see these people. He doesn't want to see them because he's autistic. It's an extreme example, but it demonstrates to you that we are wrong if we think that only new parts of our society change, traditional ones change as well.

I'm always challenging people who say 'but not everything goes digital', and we can have the power of a person on the market is such that soon, they will force quite a big amount of jobs online than it would otherwise as employers want that to be online. For example, if there is a warehouse, which you can check, temperature, humidity, everything you can check from afar. Then, you work as somebody who calls this warehouse, you're free to travel, in June, you can be in the Mediterranean, in February, you can be in the French Alps, and you're always working. Now imagine you are a Minister of Internal Affairs, trying to recruit border guards. The job is the same, you have to watch something. Can you really say that you can only work as a border guard if you agreed to sit in a given office in Tallinn? So this new world is not disorganized, but it gives the power to a person, the unity of an economy. It's not anymore a multilateral company, but a person. I'm not sure what it's about, and the OECD can help in understanding this in, first of all, analyzing this phenomenon. Everybody knows it's going on, but you cannot analyze it nationally, because it's an international phenomenon by definition, and you cannot react nationally, because to make space for these kinds of people working globally, you have to be globally connected and be able to understand what we're doing.

For example, let's say this boy sells his socks globally, people will pay through a PayPal account. It's quite hard nowadays to bring this earnings from the PayPal account into our taxable income. I mean, to clear it and receive social benefits for this. Quite often we require that people were given our signal company tells us in which company? How is a traveling YouTuber taxed for example? is it the job? Of course, it's a job, we understand. People are paid, so it's a job. How to handle too complicated if you say buy beats and everybody could create an unlimited company, they wouldn't do it. They opt out of our system unless and the OECD can help measure these changes, these variations. This is what they can do best. It's the best body to do that.

Artikli digiversiooni leiate siit: https://www.forbes.com/sites/stephaniefillion/2020/11/10/estonias-president-wants-to-lead-the-oecds-ditigal-revolution/?sh=20a57a7c5a29